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Most homeowners are not yet aware of the sell and rent back scheme where the homeowner sells the house and then becomes a tenant of the seller by paying a monthly rental fee. It works much like a pawnshop wherein you sell your property due to an immediate financial need, but you still have a chance to repossess it in the future.
Many homeowners choose to sell and rent back for a number of reasons. First is the convenience of not having to worry about where to stay after selling the home, which is the main problem of most home sellers.
Second, you could sell your home faster the sell and rent back scheme as opposed to selling your home through a real estate agent, which could take months or even a couple of years. And since you sell your home at least 25% lower than the market value, you can expect a quick turnaround time. In this time of recession, it is very difficult to sell a home and the lower value of the home makes it easier and faster to sell.
Third, if you already have a cash buyer interested in your home, then you save on real estate agent fees and legal fees.
Fourth, it is a good way to avoid repossession of your home. If you find yourself short on cash and could not afford the monthly mortgage, then you could sell your home and then rent it back for a lower rental fee than your monthly mortgage. This option is way better than having the home foreclosed and repossessed by the bank
Lastly, the sell and rent back scheme is perfect for the homeowners who are victims of the recession. For those who suddenly lost their jobs and find that they could not afford the monthly mortgage anymore, or those who simply need immediate cash, or for some it may be needed for a child going off to college, or to pay off a huge debt, whatever the reason, the sell and rent back scheme gives them the money they need right away without totally losing their home.
Homeowners could have peace of mind knowing they could still stay in the same place, their children don’t need to move to new schools, and they didn’t entirely lose their home. There is also an assurance that they could repossess the home after a minimum lease period of ten years or even longer if needed.
Friday, July 10, 2009
REO FACTS
REOs, or Real Estate Owned by banks, are either seen as a wise investment for most real estate investors or a risky investment for some. These buyers are aware that REOs are good investments since they are getting the lowest deals on foreclosed homes but they are too cautious to get involved with all the legal and financial aspects of these properties owned by banks.
Then there is the misconception that foreclosed properties end up to be more costly even if they have a lower selling price than other homes out in the market since they would have to be repaired, refurnished, repainted, etc. Just because it is an REO, it doesn’t necessarily follow that it is a neglected or badly damaged one. Most foreclosed properties are with the banks because the previous homeowner could not afford the mortgage anymore.
One good thing about REOs is they are sold at 20-30% below the average market value. This is because the aim of banks is to at least recover their money by disposing of these assets as quickly as they can, much like a department store clearance sale.
Just as you would in a typical Real Estate market, an investor should shop around and compare REO values of different banks prior to making a purchase. Include the cost of repairs in your comparisons to see if the property is indeed a bargain or more of an expense.
REOs can be good investments if one knows how to shop around and compare prices of either similar foreclosed homes or similar homes in the market. It is a good way to earn more profits as a real estate investor and many have become rich just selling REOs.
Then there is the misconception that foreclosed properties end up to be more costly even if they have a lower selling price than other homes out in the market since they would have to be repaired, refurnished, repainted, etc. Just because it is an REO, it doesn’t necessarily follow that it is a neglected or badly damaged one. Most foreclosed properties are with the banks because the previous homeowner could not afford the mortgage anymore.
One good thing about REOs is they are sold at 20-30% below the average market value. This is because the aim of banks is to at least recover their money by disposing of these assets as quickly as they can, much like a department store clearance sale.
Just as you would in a typical Real Estate market, an investor should shop around and compare REO values of different banks prior to making a purchase. Include the cost of repairs in your comparisons to see if the property is indeed a bargain or more of an expense.
REOs can be good investments if one knows how to shop around and compare prices of either similar foreclosed homes or similar homes in the market. It is a good way to earn more profits as a real estate investor and many have become rich just selling REOs.
JUMBO LOAN RATES FALL
The government’s new tax credit program allows Fannie Mae and Freddie Mac to purchase jumbo loans mostly in high end markets such as Florida, California, and the Northeast. The provision states that both companies could start buying “super conforming” loans with a maximum limit of $729,750. The real estate market could already feel Freddie Mac and Fannie Mae’s entry into the high end housing markets, as Jumbo rates drop to approximately half of a percentage point. That means more borrowers can now obtain loans more easily and at lower, more affordable costs.
Saturday, June 13, 2009
Palo Alto Real Estate
Voltaire said, “Madness is to think of too many things in succession too fast, or of one thing too exclusively.” Many people are focusing exclusively on one thing these days – mortgage rates. That doesn't mean these people are going mad, but more than a few are pushing themselves to distraction.
It's understandable, given the recent surge in mortgage rates, which in some ways feels like sand passing through the fingers. The national average on the benchmark 30-year fixed-rate mortgage was 5.95% last week, according to Bankrate's survey of large lenders, while the benchmark 15-year fixed-rate mortgage averaged 5.37%. Both rates are up 30 basis points in the past week alone.
As it now stands, the 30-year fixed-rate loan is at its highest rate since Thanksgiving 2008, when it averaged 5.97%, but it's worth noting that this same loan was averaging 6.52% this time last year. It's also worth noting – and we've noted this many times over the past month – rates still remain low from a historical perspective.
Admittedly, the higher rates have slowed down activity. Application activity fell 7.2% for the week ending June 5, according to the Mortgage Bankers Association. It was the third straight week that mortgage activity declined. Refinancing activity, in particular, has been hard hit, plunging 11.8%. But the good news is that applications for purchases actually moved up 1.1%, supporting our contention that housing remains in a recovery mode.
More good news could be taken from foreclosure filings. RealtyTrac counted 321,480 filings nationally last month, a 6% drop from April. Lenders have resumed cracking down on delinquent borrowers after foreclosures were temporarily halted earlier this year. Renewed interest in proceeding with foreclosures will help clear the market of inventory. What's more, the problem is relativity concentrated. Ten states, led by California, accounted for 77% of the foreclosures reported in May.
The Whole Picture
Yes, mortgages rates have risen substantially over the past three weeks, and we can't be sure when, or even if, they will come down. Mortgage rates are important, to be sure, but they are only part of the equation. Income and relative home prices matter too. On that front, average hourly wages continue to show incremental increases, while home prices continue to stabilize, and even rise, in many parts of the country.
Distinctions matter as well. Much has been made of the fact that lower interest rates mean more money in the pockets of borrowers. More money in the pockets of borrowers, in turn, means more money to spend to stimulate the economy. But let's not forget that it's a two-way street: The lender on the other end receives less income; thus, he has less income to spend. In other words, refinances with no equity extraction are really a wash in terms of aggregate demand for goods and services.
Mortgages used for purchases are another matter. If the house purchased already exists and the seller pays off a mortgage of the same or greater amount of the mortgage taken out by the purchaser, there is an increase in aggregate demand of brokerage and other fees collected in relation to the sale. If the house being purchased is a new one, then there is a net extension of credit and the value-added in the construction of the home is an addition to aggregate demand. In short, purchase mortgages have the greater ability to stimulate the economy, and the good news is that we continue to see an increase in purchase mortgages.
It's understandable, given the recent surge in mortgage rates, which in some ways feels like sand passing through the fingers. The national average on the benchmark 30-year fixed-rate mortgage was 5.95% last week, according to Bankrate's survey of large lenders, while the benchmark 15-year fixed-rate mortgage averaged 5.37%. Both rates are up 30 basis points in the past week alone.
As it now stands, the 30-year fixed-rate loan is at its highest rate since Thanksgiving 2008, when it averaged 5.97%, but it's worth noting that this same loan was averaging 6.52% this time last year. It's also worth noting – and we've noted this many times over the past month – rates still remain low from a historical perspective.
Admittedly, the higher rates have slowed down activity. Application activity fell 7.2% for the week ending June 5, according to the Mortgage Bankers Association. It was the third straight week that mortgage activity declined. Refinancing activity, in particular, has been hard hit, plunging 11.8%. But the good news is that applications for purchases actually moved up 1.1%, supporting our contention that housing remains in a recovery mode.
More good news could be taken from foreclosure filings. RealtyTrac counted 321,480 filings nationally last month, a 6% drop from April. Lenders have resumed cracking down on delinquent borrowers after foreclosures were temporarily halted earlier this year. Renewed interest in proceeding with foreclosures will help clear the market of inventory. What's more, the problem is relativity concentrated. Ten states, led by California, accounted for 77% of the foreclosures reported in May.
The Whole Picture
Yes, mortgages rates have risen substantially over the past three weeks, and we can't be sure when, or even if, they will come down. Mortgage rates are important, to be sure, but they are only part of the equation. Income and relative home prices matter too. On that front, average hourly wages continue to show incremental increases, while home prices continue to stabilize, and even rise, in many parts of the country.
Distinctions matter as well. Much has been made of the fact that lower interest rates mean more money in the pockets of borrowers. More money in the pockets of borrowers, in turn, means more money to spend to stimulate the economy. But let's not forget that it's a two-way street: The lender on the other end receives less income; thus, he has less income to spend. In other words, refinances with no equity extraction are really a wash in terms of aggregate demand for goods and services.
Mortgages used for purchases are another matter. If the house purchased already exists and the seller pays off a mortgage of the same or greater amount of the mortgage taken out by the purchaser, there is an increase in aggregate demand of brokerage and other fees collected in relation to the sale. If the house being purchased is a new one, then there is a net extension of credit and the value-added in the construction of the home is an addition to aggregate demand. In short, purchase mortgages have the greater ability to stimulate the economy, and the good news is that we continue to see an increase in purchase mortgages.
Saturday, June 6, 2009
Palo Alto Real Estate
After the previous week's spike in mortgage rates, we thought we'd see a pullback last week. Unfortunately, that wasn't the case; rates continued to push higher. Bankrate's national survey had the 30-year fixed-rate mortgage averaging 5.65%, while the 15-year fixed-rate mortgage averaged 5.06%. Basically, Bankrate was telling us what we already knew: These two benchmark rates are 50 basis points higher than they were two weeks ago.
So has the mortgage boat sailed too far from shore for those still wanting to jump aboard? Absolutely not. Let's keep in mind that a year ago Bankrate's national survey was showing the 30-year fixed-rate loan at 6.26%. The concern, though, is that potential borrowers are fixated on what they could have had a few weeks ago, so they've thrown in the towel in disgust. It's irrational to think that way, because there is nothing that can be done to change the situation. The logical way to approach it is to ask, where do I go from here?
Unfortunately, most people don't think that way, which could slow down the recovery in the housing market, as people delay buying or refinancing a home to wait for sub-five percent mortgage rates again, which we think is unlikely. There is no doubt that the housing market has been making progress. Indeed, the National Association of Realtors reported pending sales of existing homes rose 6.7% in April, posting the biggest monthly jump in eight years. The latest data are part of a flurry of other reports that suggest the housing market and the broader economy are stabilizing.
Factory orders are included in the data sets showing a stabilizing economy. Orders rebounded in April, rising 0.7% after declining 0.9% in March. It was only the second rise in factory orders in the past 10 months; however, the economic bulls will point to the fact that factory orders have risen in two of the past three months.
The employment situation could also be interpreted bullishly. The United States lost fewer jobs than forecast in May – 345,000, the least in the past eight months – reinforcing signs that the deepest recession in half a century is abating. Yes, the jobless rate increased to 9.4%, the highest since 1983, but it was due, in part, to more people joining the labor force to seek work.
The Power of Marginal Thinking
Here's a dilemma posed by economics professors: You bought two tickets to the NBA finals, which cost $300 a piece. You approach the arena entrance only to discover you've lost both tickets. Replacement tickets from the box office will cost you $400 a piece. What do you do?
Once the cursing has subsided, you have to consider what the game is worth. When considering the situation, most people mistakenly include the lost tickets in the equation, wondering if the game is worth more or less than $1,400. The correct way to approach the dilemma is to ignore the lost $600 – a sunk cost – and to only consider the $800. If the game is worth $800 or more, you buy the tickets. If not, you go home or to a local bar.
The point we are trying to make is that better decisions are made when people think on the margin, which means basing decisions on the reality of the situation from the current point forward. There is nothing we can do about last week's or the previous week's mortgage rates. We can only consider the rates from this point forward, which are still good, by the way. The same decision-making approach applies to home prices. Many people who want to sell are anchored to the price at which they bought, even if it has no basis in economic reality. And the reality is that home prices are darn low, which is why we think potential buyers shouldn't wait too long to pull the trigger, lest they suffer the same anguish that many procrastinating borrowers are.
So has the mortgage boat sailed too far from shore for those still wanting to jump aboard? Absolutely not. Let's keep in mind that a year ago Bankrate's national survey was showing the 30-year fixed-rate loan at 6.26%. The concern, though, is that potential borrowers are fixated on what they could have had a few weeks ago, so they've thrown in the towel in disgust. It's irrational to think that way, because there is nothing that can be done to change the situation. The logical way to approach it is to ask, where do I go from here?
Unfortunately, most people don't think that way, which could slow down the recovery in the housing market, as people delay buying or refinancing a home to wait for sub-five percent mortgage rates again, which we think is unlikely. There is no doubt that the housing market has been making progress. Indeed, the National Association of Realtors reported pending sales of existing homes rose 6.7% in April, posting the biggest monthly jump in eight years. The latest data are part of a flurry of other reports that suggest the housing market and the broader economy are stabilizing.
Factory orders are included in the data sets showing a stabilizing economy. Orders rebounded in April, rising 0.7% after declining 0.9% in March. It was only the second rise in factory orders in the past 10 months; however, the economic bulls will point to the fact that factory orders have risen in two of the past three months.
The employment situation could also be interpreted bullishly. The United States lost fewer jobs than forecast in May – 345,000, the least in the past eight months – reinforcing signs that the deepest recession in half a century is abating. Yes, the jobless rate increased to 9.4%, the highest since 1983, but it was due, in part, to more people joining the labor force to seek work.
The Power of Marginal Thinking
Here's a dilemma posed by economics professors: You bought two tickets to the NBA finals, which cost $300 a piece. You approach the arena entrance only to discover you've lost both tickets. Replacement tickets from the box office will cost you $400 a piece. What do you do?
Once the cursing has subsided, you have to consider what the game is worth. When considering the situation, most people mistakenly include the lost tickets in the equation, wondering if the game is worth more or less than $1,400. The correct way to approach the dilemma is to ignore the lost $600 – a sunk cost – and to only consider the $800. If the game is worth $800 or more, you buy the tickets. If not, you go home or to a local bar.
The point we are trying to make is that better decisions are made when people think on the margin, which means basing decisions on the reality of the situation from the current point forward. There is nothing we can do about last week's or the previous week's mortgage rates. We can only consider the rates from this point forward, which are still good, by the way. The same decision-making approach applies to home prices. Many people who want to sell are anchored to the price at which they bought, even if it has no basis in economic reality. And the reality is that home prices are darn low, which is why we think potential buyers shouldn't wait too long to pull the trigger, lest they suffer the same anguish that many procrastinating borrowers are.
Saturday, May 23, 2009
Palo Alto Real Estate
As the economy sputters and putts along, many economists continue to look for signs the housing market is climbing out of the chasm dug by the subprime mortgage meltdown. Given the sentiment from homebuilders, some may say the housing market is finally making progress on scaling the chasm's often-slippery walls.
On that front, the National Association of Home Builders/Wells Fargo Housing Market Index rose by two points (to 16) in May, reflecting greater confidence in the newly built residential housing market. The fact that the May index continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke.
Despite growing optimism in the new-home market, many economists remain less sanguine on the prospect of an overall housing-market recovery, given that the number of new housing starts declined 12.8% last month to a seasonally adjusted annual rate of 458,000 units, the lowest pace on records dating back 50 years. But it is worth noting that much of the decline was concentrated in apartment construction, which tumbled 46.1%. On a brighter note, single-family home construction actually climbed 2.8%.
Mortgage-market trends, on the other hand, offer a promising, tangible sign that a sustained recovery is possible. The Mortgage Bankers Association’s index of purchase applications, though falling slightly last week, continues along a higher long-term trend, thanks to investors and home buyers taking advantage of lower home prices and stable, historically low mortgage rates. On the latter, the 30-year fixed-rate mortgage remains near record lows reached at the end of March.
Not to repeat ourselves on one theme too often, but mortgage rates are unlikely to go significantly lower. Many of the government's recent economic stimulus initiatives have increased the odds of more inflation down the road. And that's not just us talking: Federal Reserve Bank of Philadelphia President Charles Plosser said prices may rise 2.5% in 2011, a rate well above central bankers’ preferred range, and cautioned against complacency on inflation – another reason we remain convinced that there is no time better than the present for getting a mortgage or for buying a home.
Bad News as Good News
There has been no shortage of media coverage on the foreclosure market over the past six months. In fact, the foreclosure market seems to be the only growth market left in the country, if you listen to some accounts. The bad news is that foreclosure activity is up 32% from last year, with one in every 374 US housing units receiving a foreclosure filing in April, the highest rate yet seen by RealtyTrac, which has tracked activity since January 2005.
The good news is that demand for these homes is growing. Indeed, Housingwire.com ran an article that basically stated foreclosed homes are becoming the “hot-ticket” item in real estate. In a survey by Trulia.com and RealtyTrac, 55% of survey participants indicate they are at least somewhat likely to consider purchasing a foreclosed home in the near future, compared to the 47% who said the same in November 2008.
On that front, the National Association of Home Builders/Wells Fargo Housing Market Index rose by two points (to 16) in May, reflecting greater confidence in the newly built residential housing market. The fact that the May index continued to tick up from April’s five-point increase provides confirming evidence that the improved confidence level was no fluke.
Despite growing optimism in the new-home market, many economists remain less sanguine on the prospect of an overall housing-market recovery, given that the number of new housing starts declined 12.8% last month to a seasonally adjusted annual rate of 458,000 units, the lowest pace on records dating back 50 years. But it is worth noting that much of the decline was concentrated in apartment construction, which tumbled 46.1%. On a brighter note, single-family home construction actually climbed 2.8%.
Mortgage-market trends, on the other hand, offer a promising, tangible sign that a sustained recovery is possible. The Mortgage Bankers Association’s index of purchase applications, though falling slightly last week, continues along a higher long-term trend, thanks to investors and home buyers taking advantage of lower home prices and stable, historically low mortgage rates. On the latter, the 30-year fixed-rate mortgage remains near record lows reached at the end of March.
Not to repeat ourselves on one theme too often, but mortgage rates are unlikely to go significantly lower. Many of the government's recent economic stimulus initiatives have increased the odds of more inflation down the road. And that's not just us talking: Federal Reserve Bank of Philadelphia President Charles Plosser said prices may rise 2.5% in 2011, a rate well above central bankers’ preferred range, and cautioned against complacency on inflation – another reason we remain convinced that there is no time better than the present for getting a mortgage or for buying a home.
Bad News as Good News
There has been no shortage of media coverage on the foreclosure market over the past six months. In fact, the foreclosure market seems to be the only growth market left in the country, if you listen to some accounts. The bad news is that foreclosure activity is up 32% from last year, with one in every 374 US housing units receiving a foreclosure filing in April, the highest rate yet seen by RealtyTrac, which has tracked activity since January 2005.
The good news is that demand for these homes is growing. Indeed, Housingwire.com ran an article that basically stated foreclosed homes are becoming the “hot-ticket” item in real estate. In a survey by Trulia.com and RealtyTrac, 55% of survey participants indicate they are at least somewhat likely to consider purchasing a foreclosed home in the near future, compared to the 47% who said the same in November 2008.
Sunday, May 17, 2009
Palo Alto Real Estate
There was a lot of teeth-gnashing in the media last week when news hit that April foreclosures broached a new record, with 342,000 homes receiving notices of default, auction notices or bank repossessions. RealtyTrac, an online marketer of foreclosed properties, exacerbated matters by reporting that one in every 274 homes received a foreclosure filing during the month, the highest in the company's rather scant four-years of record keeping.
The media also pounced hard on the news that the national median home price fell to $169,000 in the first quarter of 2009, due to a market flooded with lower-priced foreclosures and short sales. The punditry then began to lament that the loss of home values puts more mortgage borrowers underwater, which, in turn, could increase foreclosure rates in two ways: Underwater borrowers have no home equity to draw on should they need to pay for unexpected expenses, which makes them more likely to miss mortgage payments; and when home values fall far below mortgage balances, homeowners sometimes walk away from their loans.
We feel it's our duty to provide a little perspective. Yes, a large unexpected bill can strain family finances and the ability to service mortgage debt. But the question that needs to be asked is, how large is the expense and how often do these large expenses occur? The answer is not as often as we are lead to believe. We also feel obligated to challenge the notion that underwater borrowers walk away from their loans. Some do, but most don't. If people are working and the monthly payment is manageable, they will keep paying, even if they are underwater. Walking away has its consequences, not the least of which is making it highly unlikely the defaulted borrower can get a refinance or purchase mortgage when the economy recovers. People realize that, so they are less cavalier about throwing away their future than we are lead to believe by the media.
It's also worth noting how concentrated the foreclosure “problem” is: Ten states accounted for 75% of all foreclosure activity, and they fell generally into two categories: one-time bubble markets and the rust belt. California , not surprisingly, outpaced the competition, but even California 's foreclosure boom was confined mostly to its northern regions. Other hard-hit former boom states included Florida , Nevada , and Arizona . The rust belts states with the most filings included Illinois , Ohio and Michigan . Georgia , Texas and Virginia rounded out the top 10. And let's remember, the pick-up in foreclosures is also due to more banks accelerating the process to clear the dead wood, and that's a good thing.
Another good thing is buyers will be allowed to use their first-time homeowner tax credits as down payments when they get FHA-insured loans. Depending on the buyer's tax-filing status and the price of the home, the tax credit can be as much as $8,000.
It's Getting Better All the Time
Federal Reserve Chairman Ben Bernanke has forecast an end to the US recession, which he believes will be kaput before 2010. Bernanke also told the Congressional Joint Economic Committee that the collapse in the housing market, which began three years ago, may have bottomed out, something we've been saying for the past month.
Forecasts, especially about the future, can easily go astray, so we don't want to put too much faith in the Fed chairman's prognostication. But many signs are appearing to suggest the recession won't go much deeper. The latest comes from Mr. Bernanke himself, who said last week that “early indications” show that investor demand for the central bank’s loans to buy asset-backed securities, including mortgage-backed securities, will rise next month from May’s total, suggesting confidence in so-called toxic mortgage securities is growing.
The banks are another sign all might be well. They have been loosening their purse strings of late. Mortgages are more readily available, and so is consumer credit. This tells us that the banks' balance sheets are improving, as has their outlook for the future. Our outlook, meanwhile, has already improved.
The media also pounced hard on the news that the national median home price fell to $169,000 in the first quarter of 2009, due to a market flooded with lower-priced foreclosures and short sales. The punditry then began to lament that the loss of home values puts more mortgage borrowers underwater, which, in turn, could increase foreclosure rates in two ways: Underwater borrowers have no home equity to draw on should they need to pay for unexpected expenses, which makes them more likely to miss mortgage payments; and when home values fall far below mortgage balances, homeowners sometimes walk away from their loans.
We feel it's our duty to provide a little perspective. Yes, a large unexpected bill can strain family finances and the ability to service mortgage debt. But the question that needs to be asked is, how large is the expense and how often do these large expenses occur? The answer is not as often as we are lead to believe. We also feel obligated to challenge the notion that underwater borrowers walk away from their loans. Some do, but most don't. If people are working and the monthly payment is manageable, they will keep paying, even if they are underwater. Walking away has its consequences, not the least of which is making it highly unlikely the defaulted borrower can get a refinance or purchase mortgage when the economy recovers. People realize that, so they are less cavalier about throwing away their future than we are lead to believe by the media.
It's also worth noting how concentrated the foreclosure “problem” is: Ten states accounted for 75% of all foreclosure activity, and they fell generally into two categories: one-time bubble markets and the rust belt. California , not surprisingly, outpaced the competition, but even California 's foreclosure boom was confined mostly to its northern regions. Other hard-hit former boom states included Florida , Nevada , and Arizona . The rust belts states with the most filings included Illinois , Ohio and Michigan . Georgia , Texas and Virginia rounded out the top 10. And let's remember, the pick-up in foreclosures is also due to more banks accelerating the process to clear the dead wood, and that's a good thing.
Another good thing is buyers will be allowed to use their first-time homeowner tax credits as down payments when they get FHA-insured loans. Depending on the buyer's tax-filing status and the price of the home, the tax credit can be as much as $8,000.
It's Getting Better All the Time
Federal Reserve Chairman Ben Bernanke has forecast an end to the US recession, which he believes will be kaput before 2010. Bernanke also told the Congressional Joint Economic Committee that the collapse in the housing market, which began three years ago, may have bottomed out, something we've been saying for the past month.
Forecasts, especially about the future, can easily go astray, so we don't want to put too much faith in the Fed chairman's prognostication. But many signs are appearing to suggest the recession won't go much deeper. The latest comes from Mr. Bernanke himself, who said last week that “early indications” show that investor demand for the central bank’s loans to buy asset-backed securities, including mortgage-backed securities, will rise next month from May’s total, suggesting confidence in so-called toxic mortgage securities is growing.
The banks are another sign all might be well. They have been loosening their purse strings of late. Mortgages are more readily available, and so is consumer credit. This tells us that the banks' balance sheets are improving, as has their outlook for the future. Our outlook, meanwhile, has already improved.
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